AFME launches taskforce to consider European T+1 settlement

This article was first published in Global Investor Group.

A European bank trade body has launched an initiative to consider the prospect of Europe moving to next-day T+1 settlement like the US.

The Association for Financial Markets in Europe (AFME) proposed on Thursday the establishment of a group of industry trade bodies to consider the prospect of European markets moving to T+1 from their current standard of T+2 (settlement two days after the trade is agreed).

The AFME initiative was launched less than three weeks after the US regulator said on February 15 the US market will move to T+1 on May 28 2024.

Adam Farkas, CEO of AFME, said: “With the US having announced its intention to move to T+1 settlement by May 2024, the discussion on whether Europe should follow suit has become more pressing. Addressing this important topic will require a collaborative approach, and therefore all impacted stakeholders are encouraged to join the industry taskforce.”

The trade body said the taskforce will address two key questions: “Should Europe move to T+1?” and “How and when should the move happen?”

Pete Tomlinson, director of post-trade at the trade body, said: “AFME is convening this industry taskforce to ensure all aspects of T+1 adoption in Europe are considered, including direct economic costs and savings to the industry, as well as less tangible factors such as global alignment and market attractiveness. It is important that such a move is carefully considered.”

AFME said the taskforce will consider any possible changes to the current post-trade environment to enable a T+1 migration in Europe.

Javier Hernani, head of SIX Securities Services, said the European migration would be more complex than the US transition because of the diverse nature of the European market.

Hernani said: “With 14 currencies, 31 central securities depositories (CSDs) and distinctive regulatory and market features in the different countries of Europe, it’s a much more complicated picture as to how T+1 can be achieved.”

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